Smart Pricing Means Innovation. Time to Flex Those Data Crunching Muscles!
May 13th, 2019 (Updated 03/23/2021) | 4 min. read
By Duncan Hendy
• Setting prices and pressing the big green sell button is not enough, speed of reaction and awareness of the pocket-price waterfall means relying on a heck of a lot of data spread across many parts of your pricing infrastructure, whose quality you need to verify and whose logical flow you need to ensure through all your systems.
• Taking a more data and process-centric approach to deals and offers is one of the key levers that helps companies be successful.
“Crunch that data, grow globally and sell more with greater margins!” Sound like something currently achievable or the just some kind of mantra pricing dudes tell themselves every morning in the mirror before hanging ten on the pricing tidal wave? The answer is actually a bit of both.
Global Juggernaut Seeks Sympathetic Customer
Global expansion is the dream of companies. Having a healthy market share and huge selection of SKUs, and combining those with a thorough knowledge of the local markets should result in informed pricing, a good competitive overview, and loyal customers based on perceived value and willingness-to-pay. And notice I said “should”!
But it goes deeper. Setting prices and pressing the big green sell button is not enough, speed of reaction and awareness of the pocket-price waterfall means relying on a heck of a lot of data spread across many parts of your pricing infrastructure, whose quality you need to verify and whose logical flow through all your systems you need to ensure. And the bigger you get, the more you need a flexible pricing solution to do it.
A Nice Package Deal
Take, for example, Sonoco, a global provider of a diverse range of packaging. They operate more than 300 manufacturing facilities in 33 countries serving 85 customers with 20 plus business units. Based on the breadth of their products, and scope of their geography, scaling up an initiative like rolling out price optimization software means needing 100% configurability to control every aspect of their pricing cycle.
Price Transformation Rattles a Lot of Cages
Sonoco’s biggest interest lies in driving bigger and better business results. If they can’t quantify the value, they feel they are losing focus. For them, taking a more data and process-centric approach to deals and offers is one of the key levers that helps them be successful. Their goal is to be more strategic in their pricing with the intention to create a closer alignment between price and the value they provide to their customers.
When they implemented Pricefx, they found its flexibility meant they could bring all that huge amount of data they had into a single environment. And what they discovered was some of the information that was really most useful to making a better pricing decision wasn’t organized in any structured way that was visible to the people at the time they were making that decision.
What the Data’s That?
The key for them was to identify what information they had and mapping the data to it. Instead of having 15 different attributes, boiling it down to the meaningful few –creating not only quantitative data, but some of the qualitative data also led to making better decisions. They wanted to be able to sell on that quality and service as that differentiating capability.
Dashboards to the Rescue
Dashboards help with visibility. Some of them they created through Pricefx include a customer revenue and KPI dashboard. Then there is the price variation dashboard, which is helpful in understanding how much money is on the table if they move a customer from one quartile to the next one. Using one system to do the math means they don’t have to spend time quantifying, which frees them up to spend more time thinking about how to we achieve their goals. One of their favorite dashboards is the opportunity dashboard, which is built based on predefined targets for prices for like products and like customers, along with predefined service models and service offers for those particular customer categories.
This has led to more confident and informed conversations with customers, by taking the data and outputs from Pricefx, and sitting down in front of customers to use it explain their proposals to them. And as many sales guys don’t like doing complicated calculations and then justifying them to their prospective and existing clients, this pricing tool has fast become their flexible friend that’s fun to be with!